While many people are now receiving money through the Coronavirus Aid, Relief, and Economic Stimulus (CARES) Act, the fact remains that 22 million people have now filed for unemployment benefits. The CARES Act also provides for an additional $600 per week for those who qualify for unemployment, but with a record number of people applying, it may be a while before they begin to receive that money.
For those impacted (virtually millions of Americans), this is a time to start making phone calls to lenders and service providers to ask for help.
Mortgage lenders across the country have said that they will work with borrowers who are facing hardships. Some lenders are even suspending or reducing payments. I would suggest that if you cannot make your mortgage payments, please contact your lender immediately to find out what your options are.
If you happen to have a mortgage that is backed by Fannie Mae or Freddie Mac (about half of all mortgage holders), there is great help. The mortgage buyers have suspended all foreclosures and evictions for homes owned by their companies. Forbearance programs have also been expanded, which could even suspend payments for up to a year. You should call your provider and ask if you hold a Fannie or Freddie loan.
If your mortgage is insured by FHA (Federal Housing Administration), the federal government has also ceased foreclosures and evictions for enterprise-backed mortgages.
If you're among those who rent (35 percent of U.S. Households, according to census.gov), your options depend on where you live and whom you rent from. I recommend reaching out to your landlord or property management company to ask for leniency if you are facing economic hardships.
Many families are struggling to keep up with auto loans, credit card charges made to cover immediate needs and other debt. This is the time that you want to reach out to your lender if you are struggling to keep up. Financial institutions have been instructed by the federal government to work with borrowers who have been impacted by the coronavirus, and many banks are working with clients to help with:
- Payment extensions
- Fee waivers (overdrafts, service charges, early CD withdrawal fees)
- Lower interest rates (temporarily)
- New payment arrangements
For many years, utility companies (gas, electric, etc.) have had assistance programs in place for those who are struggling to keep up with their bills due to unforeseen circumstances. In most areas, there are also programs to help low income households who may be struggling. I recommend calling your local utility companies if you are having trouble staying afloat. Several cities have even ceased on utility shutoffs.
As you may be aware, health insurance has been a major issue for many households across the U.S., not just during a pandemic like this, but in general. There are programs out there than can help during a time of layoffs and life-changing circumstances.
COBRA allows workers who have been laid off at large employers to pay to continue their health insurance. Unfortunately, COBRA can be quite expensive.
Due to the coronavirus, some states have reopened individual insurance exchanges for those who didn’t find coverage during the regular times that began last fall. If you have been impacted through your employer, you may be able to shop on the exchanges outside the regular enrollment period. Some may also qualify for Medicaid.
Check out your options to see what may benefit you the best.
As part of the CARES Act, no payments will be required on federal student loans owned by the U.S. Department of Education between March 13, 2020 and September 30, 2020. Federal student loan borrowers are automatically being placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment (although you can still make your payment if you choose.) If you CAN make your payments, it is a good idea to do so. That's because as part of the CARES Act, the interest on these federal student loans will automatically drop to zero percent between March 13, 2020 and September 30, 2020. So, any payments you make now will go completely to reducing your principal balance (amount you borrowed without interest). This is an opportunity to reduce your debt faster.
For those who have fallen behind on federal student loans, the government has temporarily stopped collections and wage garnishments for borrowers and have encouraged private student loan providers to step up and do the same thing.
You can visit the Department of Education website for more information about student loan debt relief. You should also be aware that private student loans, and federal student loans not owned by the Education Department, are not covered by the CARES Act.
Pay attention here. This is very important. Remember, a budget is a spending plan that tells us how much money we have going in and going out. The goal (obviously) is to have more money coming in. During tough times like this, it’s essential to cut any expenses that would be considered “nonessential.” It’s sometimes hard to tell ourselves that we don’t need certain expenses, as we can almost always make the case we do “need” them. Now, it’s time to get serious.
This could be the time to cut gym memberships or to reduce phone, Internet plans or streaming plans, etc. A budget helps define what truly is a Need (something NECESSARY for survival) and what is a Want (something we CAN do without).
Most people think budgeting is only necessary in an emergency; however, I personally think budgets are essential for all households, regardless. Nevertheless, this IS an emergency and this time calls for action to get your family on a budget.
If you are one of the many households receiving a government stimulus payment, I recommend using that money for essential items (rent, mortgage, bills) and not for “wants.” If you are laid off or your income has been reduced, apply for unemployment as soon as possible! It may take several weeks to start seeing money coming in from this, so the time to act is now.
If you're contemplating whether to reach out to landlords, mortgage holders, utility companies and more, I always recommend making that phone call. Asking for help is never easy to do. This is a time to leave our ego at the door, as you never know how they may be willing to help. Just as you may be struggling, the person you talk to could be, too. Lenders and service providers want to help, but they need to hear from you in order to assist you during these trying times. Building a relationship or rapport with those you owe money to is a huge asset.
I wish you all to stay safe and healthy (including your finances).
Facing financial hardships?
During this period of disruption, we recognize that some are facing unanticipated financial hardships. If you're an Old National client and find yourself in this circumstance, please don’t hesitate to reach out to your local banking center or call us at 1-800-731-2265, Option 6.
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